Which Accounting Basis Should I Use?
In this article:
- Accounting Methods Explained
- How to Change Your Accounting Basis
- Patriot’s Patented Dual-Ledger Accounting
Background
By default, all accounting customers are set to Modified Cash Basis. You can change your accounting basis as your business needs change, and each user can determine the accounting basis they want to use and have reports in. See Patriot’s Patented Dual-Ledger Accounting for more info.
Accounting Methods Explained
- Cash Basis– Simple and ideal for small businesses without inventory, fixed assets, or loans. Income is recorded when received, and expenses when paid.
- Note: If you use Patriot Payroll, you can only select Cash Basis if you’re a full-service payroll customer with no deductions or contributions. Otherwise, you’ll need Modified Cash Basis to track payroll liabilities.
- Modified Cash Basis – Works like Cash Basis but allows tracking of additional accounts like fixed assets and loans.
- Accrual Basis – More comprehensive, tracking income when invoiced and expenses when billed.
For a detailed explanation of the different types of accounts, see our blog article about cash-basis vs. accrual-basis accounting.
How to Change Your Accounting Basis
- Go to Settings > General Setup > Transaction Settings
- Select the Accounting Basis you want.
- Click “Save.”
Patriot’s Patented Dual-Ledger Accounting
Patriot’s Dual-Ledger Accounting lets you switch between accounting methods on reports without conversions. This means:
- Tracks transactions in cash, modified cash, and accrual basis simultaneously.
- View reports in different accounting bases as needed.
- Your last-selected accounting basis is saved for future use in reports.
With this flexibility, you can see financial reports in cash basis—while your accountant can see it accrual basis.
Your feedback will not receive a reply. If you have a specific issue, please reach out to our support team here.